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Coal export investor pushes for control of Ambre Energy, its Boardman and Longview proposals

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An investor is positioning itself to take control of Ambre Energy, the Australian company planning coal export terminals in Oregon and Washington. Ambre has proposed terminals that would connect coal trains like this one in Wyoming with Asian buyers.
(AP Photo/Nati Harnik, File)

A major
investor is positioning itself to take control of the Australian company trying
to build coal export terminals in Oregon and Washington.

A
Denver-based private equity firm, Resource Capital Funds, could eventually own as
much as 55 percent of Ambre Energy, according to the terms of a deal Ambre
shareholders will be asked to approve when they meet this week.

Ambre
already owes Resource Capital $110 million. The proposal would allow the equity
firm to convert some of that debt into a greater ownership interest.

It's unclear
what effect, if any, the change would have on coal export terminals that have stirred
region-wide interest. Ambre says it remains well positioned to build the
projects in Boardman and Longview, Wash.

"The shift does not impact the two export projects," Ambre spokeswoman
Liz Fuller said. "If anything, it signifies a deepening investment in the
projects. We are confident both are viable."

Ambre is leading efforts to build two coal export facilities in the
Pacific Northwest. One facility at the Port
of Morrow in Boardman would send as much as 8.8 million tons of coal annually
from Wyoming and Montana to Asia. Coal would arrive at Boardman by train, be transferred
to enclosed barges that would ply the Columbia River, then be loaded on Asia-bound
ships in Port Westward. Ambre says the facility will create 50 full-time jobs
and 2,100 temporary construction jobs.

The company
is banking on a robust export market for coal in Asia. It's working on a
larger, longer-term, $650 million project in Longview, Wash. that could export
an additional 48 million tons, as well as a separate export facility in Texas.
Environmental groups have strongly protested the facilities here.

Resource
Capital is a major financier of the Australia-based coal company. One of
its partners already sits on Ambre's board. The proposals being weighed this
week would give it even more sway over Ambre and eventually allow it to take
majority control.

One vote
before Ambre shareholders would allow the equity firm to immediately increase
its share of Ambre from 19.9 percent to 26.5 percent. Another would allow Resource
Capital to eventually take majority control in lieu of Ambre repaying an
undetermined amount of the $110 million it owes the equity firm.

Resource
Capital Funds is the only investor to have given Ambre outside financing this
year, most recently awarding a $20 million letter of credit in August.

Ambre has
struggled financially while developing the proposed terminals, which the
company says is typical of such efforts. After losing $30 million in a six-month
period ending last December, Ambre's independent auditor warned investors that
unless the company raised more money, "material uncertainty" existed about
whether it could continue operating.

Ambre delayed
a plan last year to be listed publicly on the Australian Securities Exchange. In
August, the company announced its purchase of a Montana coal mine was
indefinitely suspended, a setback for its coal export plans. It had planned to
extract coal from that mine, called the Decker Mine, and ship it to Asia
through its proposed facilities. But the deal depended on Ambre assuming $70
million in liabilities required for the mine's reclamation, which became a
sticking point.

Fuller, the Ambre
spokeswoman, said the company is now considering operating the coal terminals and
charging to export other companies' coal. "We're keeping the options open," she said.

Ambre missed
a July 2013 deadline Resource Capital set for getting state and federal permits
for the Port of Morrow terminal at Boardman. The new deadline is December 2015.
The company says it's a realistic goal and they expect more investors to come
forward after receiving regulatory approvals.

"We have
multiples of investors that are very interested in this project," said Clark
Moseley, the Ambre executive leading the Morrow project. "But they're sitting
on the sidelines waiting for these permits. Once it gets permits you'll see a
significant amount of capitalization and a very, very strengthened balance
sheet."